Changes to War Risks Areas – JWLA029 dated 07.03.2022

THE NOT-SO-GOOD, THE BAD, AND THE UGLY

WHAT ARE THE CHANGES

On 7th March 2022 the Joint War Committee implemented changes to the Areas of Perceived Enhanced Risk that are used as the foundation for trading exclusions in War Risks insurance policies.

The following listed areas have been amended in the list:

Europe
 

1)         Sea of Azov and Black Sea waters enclosed by the following boundaries

            a) On the west, around Romanian waters, from the Ukraine-Romania border at 45° 10.858'N, 29° 45.929'E to high seas point 45° 11.235'N, 29° 51.140'E

            b) thence to high seas point 45° 11.474'N, 29° 59.563'E and on to high seas point 45° 5.354'N, 30° 2.408'E

            c) thence to high seas point 44° 46.625'N, 30° 58.722'E and on to high seas point 44° 44.244'N, 31° 10.497'E

            d) thence to high seas point 44° 2.877'N, 31° 24.602'E and on to high seas point 43° 27.091'N, 31° 19.954'E

            e) and then east to the Russia-Georgia border at 43° 23.126'N, 40° 0.599'E

2)         All inland waters of Ukraine

3)         Inland waters of Russia within the following areas:

            a. Crimean Peninsula

            b. River Don, from Sea of Azov to vertical line at 41° E

            c. River Donets, from River Don to Ukraine border

4)         All inland waters of Belarus south of horizontal line at 52° 30’ N

THE NOT-SO-GOOD, THE BAD, AND THE UGLY

1 / The Joint War Committee has issued a new clause called Hull War, Strikes, Terrorism and Related Perils Notice of Cancellation Administration Clause referenced by JW2022/007 dated 7.3.22. 

Link to clause (scroll to Bulletins/Circulars heading)

Notes:

- The clause seeks to amend the notice period from 7 days to 48 hours, with time starting to count upon underwriters sending the notice, with the notice being deemed delivered when sent. We are raising concerns with the JWC and with underwriters that the above arrangements will not work in practice to enable assureds sufficient time to consider an efficient way to buy-back cover, nor provide certainty for owners who contract their vessels in particular on voyage charters. 

- The clause articulates the process of how such notices work.

2 / Certain insurers are introducing a new clause called Russia-related Sanctions Clause. Text below. The clause as at today does not seem to have a formal Lloyd's reference.

Russia-related Sanctions Clause 

Notwithstanding any other term of this insurance, this insurance additionally excludes:

Loss damage liability or expense arising from capture seizure arrest restraint detainment confiscation or expropriation where such capture etc directly or indirectly arises out of or in connection with a Russia-related Sanction.   

For the purposes of this exclusion, a Russia-related Sanction means any action measure or sanction (permanent or temporary) imposed on and/or enforced and/or taken against the Vessel and/or any property thereon pursuant to any legislation, regulation, order, directive, executive act or any other executive or political means whatsoever brought into force at any time (whether before or after the date of this policy) by the United Nations, the European Union, the United Kingdom, the United States or any other State or supra-national body whatsoever where such legislation etc has been brought into force in connection with, or by way of response to, Russia's military action against Ukraine.

For the avoidance of any doubt, this additional exclusion is entirely without prejudice to the Sanction Limitation and Exclusion clause incorporated herein.

- This clause effectively nullifies a significant scope of war risks cover related to vessel capture, seizure, arrest, restraint, detainment, confiscation and expropriation.

- The clause is not limited in geography to its application.

We urge war risks policyholders to review changes to their war risks policy during the endorsement of the new JWLA029 trading exclusions, as well as upon subsequent policy renewals, to ensure you are aware of any changed obligations or restrictions in your cover.

HOW WILL YOUR WAR RISKS POLICY BE AFFECTED

The above new excluded areas will most likely be incorporated into your policy of insurance. There are usually two ways in which this could happen:

- If your War Risks insurance is placed with or led by a “Club” or “Association”, the insurer will most likely issue a circular that will apply to all policies of insurance noting that the new areas will automatically be incorporated into the policy with effect from a future date.

- If not, your War Risks lead insurer will need to issue notice (usually to your broker) that the new list of areas will be incorporated specifically into your policy with effect from a future date.

Insurers usually allow between 2-7 days for such a change to come into effect.

Any policies that contain pre-agreed rates for trade into newly excluded areas might need to have those rates revalidated or renegotiated.

We draw your attention to the requirement in most Protection & Indemnity policies of insurance that underlying war risks insurance, including a primary layer of war P&I cover, needs to be in place. This includes the period while vessels are within the new JWLA029 listed areas.

If the additional JW2022/007 clause is introduced, the notice period going forward is set at 48 hours in accordance with the provisions of the clause.

ILLUSTRATIVE MAP

Howden’s marine clients will over the next few days receive an illustration of the new war risks areas. If this does not reach you, please let us know. This illustration should enable your operational and commercial teams to identify the new areas visually and to plan for the changed dynamic that may arise in respect of existing and future trade. 

AWRP.INSURE

If you have not yet tried it, please visit our online premium indication tool AWRP.insure.

The tool is an online premium calculator. It enables prompt computation of a very rough indication of additional war risks insurance premiums (AWRP), Kidnap and Ransom insurance premiums (K&R), as well as premiums for Loss of Hire (LOH) for both AWRP and K&R (AWRP LOH and K&R LOH). Its purpose is to enable prompt and accurate budgeting of additional premiums at the time of commercial voyage calculations. 

For any questions regarding the contents of this Marine Client Advisor or for any other marine insurance enquiries please do get in touch. 

Howden Insurance Brokers is not a technical, commercial or legal adviser. Any commentary made in this document should not be construed as such, and we do not guarantee in any way the accuracy of the resources used or referenced in this document. In case of doubt, formal advice should be obtained that is directly relevant to your circumstances.